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Obama Backs Changing Rules to Let Consumers Unlock Phones

Obama Backs Changing Rules to Let Consumers Unlock Smartphones
An Apple Inc. iPhone 4 is displayed during an event to announce that Verizon will start selling a version of Apple Inc.'s iPhone in New York. Photographer: Ramin Talaie/Bloomberg

The Obama administration said consumers should be allowed to unlock smartphones and tablet computers without risking criminal penalties, siding with critics of a ruling from the U.S. Library of Congress.

More than 114,000 people endorsed an Internet petition to rescind a decision by the library that took effect in January. “The White House agrees,” R. David Edelman, senior adviser for Internet, innovation, and privacy, said in a blog posting today entitled, “It’s Time to Legalize Cell Phone Unlocking.”

“If you have paid for your mobile device, and aren’t bound by a service agreement or other obligation, you should be able to use it on another network,” Edelman wrote. “It’s common sense.”

The Federal Communications Commission and the National Telecommunications & Information Administration, a Commerce Department branch that advises President Barack Obama on airwaves policy, will deal with the issue, Edelman said.

The FCC will look into “into whether the agency, wireless providers, or others should take action,” FCC Chairman Julius Genachowski said in a statement posted today on the agency’s website.

The Obama administration wants it to be clear that neither criminal law nor technological locks should prevent consumers from switching carriers when they are no longer bound by a service agreement or other obligation, Edelman said.

Carriers led by Verizon Wireless, the largest U.S. mobile carrier, and No. 2 AT&T Inc. backed the library’s ruling. Under the decision made under U.S. copyright law, consumers aren’t allowed to unlock new mobile phones purchased from wireless providers.

Business Model

The Library of Congress’s Copyright Office, as part of a periodic review, said altering software to let one carrier’s phones work on other networks wasn’t among activities expressly permitted under copyright law.

CTIA-The Wireless Association, with members including the four largest U.S. mobile carriers -- Verizon, AT&T, Sprint Nextel Corp. and T-Mobile USA Inc. -- had argued that “locking cell phones is an essential part of the wireless industry’s dominant business model” involving handset subsidies and contracts, Librarian of Congress James Billington said in the notice.

Consumers can still choose to buy unlocked phones that will work with multiple carriers, giving them an alternative, Billington said. Partly because of that possibility, unlocking newly purchased phones doesn’t merit an exemption under copyright law, he said. The rule change allowed consumers who had previously purchased phones to unlock their handsets.

Unlocking Requests

“When the contract terms are satisfied, or for a reason that is included in the carrier’s unlocking policy -- such as a trip outside the U.S. -- carriers will unlock a phone at their customer’s request,” Michael Altschul, senior vice president with the trade group, said in an e-mailed statement today.

CTIA said in a filing last year with the Library of Congress that subsidies “depend on ensuring that the handset will be used, as contemplated, with the carrier’s service.”

Circumventing barriers to unauthorized use “will have significant adverse effects on the wireless industry and on the public,” the Washington-based trade group said in its February 2012 filing.

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